Q1 2025 World Acceptance Corp Earnings Call
Good morning, and welcome to World Acceptance Corporation's first quarter 2025 earnings conference call.
Operator: 1st quarter 2025 earnings conference call. This call is being recorded. At this time, all participants have been placed in a listen-only mode.
Operator: Quarter 2025 Earnings Conference Call. This call is being recorded. At this time, all participants have been placed in a listen-only mode.
Speaker Change: This call is being recorded. At this time, all participants have been placed in a listen-only mode. Before we begin, the Corporation has requested that I make the following announcement.
Operator: Before we begin, the corporation has requested that I make the following announcement. The comments made during this conference call may contain certain forward-looking statements within the meaning of Section 21-E of the Securities Exchange Act of 1934 that represent the corporation's expectations and beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Statements other than those of historical fact, as well as those identified by the words anticipate, estimate, intend, plan, expect, believe, may, will, and should, or any variation of the foregoing and similar expressions, are forward-looking statements. Additional information regarding forward-looking statements and any factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements are included in the paragraph discussing forward-looking statements in today's earnings press release and in the risk factors section of the corporation's most recent Form 10-K for the fiscal year ended March 31, 2024, and subsequent reports filed with or furnished to the SEC from time to time.
Operator: Before we begin, the Corporation has requested that I make the following announcement. The comments made during this conference call may contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that represent the Corporation's expectations and beliefs concerning future events, and such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Statements other than those of historical fact, as well as those identified by the words anticipate, estimate, intend, plan, expect, believe, may, will, and should, or any variation of the foregoing and similar expressions, are forward-looking statements.
Operator: Additional information regarding forward-looking statements and any factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements is included in the paragraph discussing forward-looking statements in today's earnings press release and in the risk factors section of the Corporation's most recent Form 10-K for the fiscal year ended March 31, 2024 and subsequent reports filed with or furnished to the SEC from time to time. The Corporation does not undertake any obligation to update any forward-looking statements it makes.
Speaker Change: The comments made during this conference call may contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that represent the Corporation's expectations and beliefs concerning future events.
Speaker Change: Such forward-looking statements are about matters that are inherently subject to risks and uncertainties.
Speaker Change: Statements other than those of historical fact, as well as those identified by the words anticipate, estimate, intend, plan, expect, believe, may, will, and should, or any variation of the foregoing and similar expressions, are forward-looking statements.
Speaker Change: Additional information regarding forward-looking statements and any factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements.
Speaker Change: are included in the paragraph discussing forward-looking statements.
Speaker Change: in today's earnings press release and in the risk factors section of the corporation's most recent Form 10-K for the fiscal year ended March 31st, 2024 and subsequent reports filed with or furnished to the SEC from time to time.
Operator: The corporation does not undertake any obligation to update any forward-looking statements it makes.
Speaker Change: The corporation does not undertake any obligation to update any forward-looking statements it makes.
Chad Prasad: At this time, it is my pleasure to turn the floor over to your host, Chad Prasad, President and Chief Executive Officer. Please go ahead.
Operator: At this time, it is my pleasure to turn the floor over to your host, Chad Prashad, President and Chief Executive Officer. Please go ahead.
Speaker Change: At this time, it is my pleasure to turn the floor over to your host, Chad Prashad, President and Chief Executive Officer. Please go ahead.
Chad Prasad: Good morning, and thank you for joining our fiscal 2025 first quarter earnings call. Before we open up the questions, there are a few areas I'd like to highlight. We've talked a good bit about right sizing and de-risk and portfolio over the last year or two, as well as returning to moderate growth this year. In the first quarter of 2025, we experienced moderate growth in our customer base of around 50 basics. There are average balance declines slightly, and growth yields improved across all customer types. Year of year, our average balance has decreased almost 7% from June 30, 2023.
Ravin Chad Prashad: Good morning, and thank you for joining our fiscal 2025 first quarter earnings call. Before we open up to questions, there are a few areas I'd like to highlight.
Ravin Chad Prashad: Good morning, and thank you for joining our fiscal 2025 first quarter earnings call. Before we open up to questions, there are a few areas I'd like to highlight.
Ravin Chad Prashad: We've talked a good bit about rightsizing and de-risking the portfolio over the last year or two, as well as returning to moderate growth. In the first quarter of 2025, we experienced moderate growth in our customer base of around 50 basis points. Their average balance declined slightly, and gross yields improved across all customers. Year-over-year, our average balance has decreased almost 7% from June 30, 2023. Currently, our average loan balance has decreased over 11% from the peak average loan size, which was towards the end of fiscal year 2023.
Ravin Chad Prashad: We've talked a good bit about right sizing and de-risking the portfolio over the last year or two, as well as returning to moderate growth this year.
Ravin Chad Prashad: In the first quarter of 2025, we experienced minor growth in our customer base of around 50 basis points.
Ravin Chad Prashad: Their average balance declined slightly, and gross yields improved across all customer types.
Ravin Chad Prashad: Year-over-year, our average balance has decreased almost 7% from June 30, 2023.
Chad Prasad: Currently, our average loan balance has decreased over 11% from the peak average loan size, which was towards the end of fiscal year 2023. Along with that decrease in average loan size, we've significantly improved our growth yields, delinquency, and gene expenses. As the underlying portfolio improves, our loss reserves have also declined year-to-year instead of the maturing of the portfolio. We are focused on modest, single-digit, high-credit-quality growth this year through specific strategies for each of our customer types. For new customers, we've adjusted our acquisition channels and are already increasing our approval rates while minimizing losses. In the first quarter, while new customer loan volume was down about 8% in dollars within the quarter year of year, our new customer average loan balance also decreased, and the number of new customers in the quarter declined by only 3.5% year of year.
Ravin Chad Prashad: Currently, our average loan balance has decreased over 11% from the peak average loan size, which was towards the end of fiscal year 2023.
Ravin Chad Prashad: Along with that decrease in average loan size, we've significantly improved our gross yields, delinquency, and G&A. As the underlying portfolio improves, our loss reserves have also declined year-over-year in step with the maturing of the portfolio. We are focused on modest, single-digit, high-credit quality growth this year through specific strategies for each of our customers. For new customers, we've adjusted our acquisition channels and are already increasing our approval rates while minimizing loss. In the first quarter, new customer loan volume was down about 8% in dollars within the quarter year-over-year.
Ravin Chad Prashad: Along with that decrease in average loan size, we've significantly improved our gross yields, delinquency, and G&A expenses.
Ravin Chad Prashad: As the underlying portfolio improves, our loss reserves have also declined year-over-year in step with the maturing of the portfolio.
Ravin Chad Prashad: We are focused on modest, single-digit, high-credit quality growth this year through specific strategies for each of our customer types.
Ravin Chad Prashad: For new customers, we've adjusted our acquisition channels and are already increasing our approval rates while minimizing losses.
Ravin Chad Prashad: In the first quarter, while new customer loan volume was down about 8% in dollars within the quarter year-over-year, our new customer average loan balance also decreased, and the number of new customers in the quarter declined by only 3.5% year-over-year.
Ravin Chad Prashad: Our new customer average loan balance also decreased, and the number of new customers in the quarter declined by only 3.5% year-over-year. We also improved our first payment default rates, which is an early indication of success for those customers. This is part of a low-cost growth strategy in terms of both the upfront cost of acquisition as well as the total cost of acquisition for a tenured performing customer. As we've regrouped to a higher credit quality and performing portfolio, we've grown a large paid-off customer population that continues to return as a former customer and make up a larger percent of our non-refinanced loans.
Chad Prasad: We also improved our first pay default rates, which are an early indication of success for those customers. This is part of a low-cost growth strategy in terms of both the upfront cost of acquisition, as well as the total cost of acquisition for a tenured performing cost. As we've regrouped to a higher credit quality and performing portfolio, we've grown a large paid-off customer population that continues to return as a former customer and make up a larger percent of our non-reef financial efforts. As we increase their weighting in the portfolio, our net yields and income naturally improved.
Ravin Chad Prashad: We also improved our first pay default rates, which are an early indication of success for those customers.
Ravin Chad Prashad: This is part of a low-cost growth strategy in terms of both the upfront cost of acquisition as well as the total cost of acquisition for a tenured performing customer.
Ravin Chad Prashad: As we've regrouped to a higher credit quality and performing portfolio, we've grown a large paid-off customer population that continues to return as a former customer and make up a larger percent of our non-refinanced loans.
Ravin Chad Prashad: As we increase their weighting in the portfolio, net yields and income naturally... Within the quarter, both returning and refinanced customers had a similar trend of improvement in performance and yield, as well as a lower average balance. While the former customer loan volume in dollars declined 7.6 percent this quarter versus the first quarter last year, the number of former customers actually increased by 6.3 percent year-over-year. For returning former customers, the average balance of those originations decreased 13%, and the average yield is significantly higher, and they have the lowest first pay default rates of our non-refinance originations. Similarly, refinance loan volume in dollars decreased 5% within the quarter, year-over-year, while the number of refinances actually increased 6% in the quarter, and the average balance of those originations decreased tenfold.
Speaker Change: As we increase their weighting in the portfolio, our net yield and income naturally improve.
Chad Prasad: Within the quarter, both returning and re-finance customers had a similar trend in improvement and performance yield, as well as lower average balances. While the former customer loan volume and dollars declined 7.6 percent this quarter versus first quarter last year, the number of former customers actually increased by 6.3 percent year or year. For returning former customers, the average balance of those rich nations decreased 13 percent, and the average yield is significantly higher, and they have the lowest first pay to fall rates of our non-refinance originations. Similarly, re-finance loan volume and dollars decreased 5 percent within the quarter year of year, while the number of refinances actually increased 6 percent in the quarter.
Speaker Change: Within the quarter, both returning and refinance customers had a similar trend improvement in performance and yield, as well as lower average balances.
Speaker Change: While the former customer loan volume in dollars declined 7.6% this quarter versus first quarter last year, the number of former customers actually increased by 6.3% year over year.
Speaker Change: For returning former customers, the average balance of those originations decreased 13% and the average yield is significantly higher, and they have the lowest first pay default rates of our non-refinanced originations.
Speaker Change: Similarly, refinance loan volume in dollars decreased 5% within the quarter year-over-year, while the number of refinances actually increased 6% in the quarter.
Chad Prasad: And the average balance of those rich nations decreased 10 percent. With these six in the portfolio make up and the waiting continuing into the second quarter, we expect the CEOs and delinquency trends continue to convert into the same revenue and income trends that we're already seeing this year. Today, in the second quarter, we've seen growth in our former customer base. Currently, we're at the highest number of former customers in July that we've had going back at least 10 years. All at lower average balances, higher yields, and great credit quality, leading us to expect continued low delinquency.
Ravin Chad Prashad: With these shifts in the portfolio makeup and the weighting continuing into the second quarter, we expect to see yields and delinquency trends continue to convert into the same revenue and income trends that we're already seeing this year. Today, in the second quarter, we've seen growth in our former customer base. Currently, we had the highest number of former customers in July that we've had going back at least 10 years, all at lower average balances, higher yields, and great credit quality, leading us to expect continued low delinquency.
Speaker Change: and the average balance of those originations decreased 10%. With these shifts in the portfolio makeup and the weighting continuing into the second quarter, we expect to see yields and delinquency trends continue to convert into the same revenue and income trends that we're already seeing this year.
Speaker Change: Today, in the second quarter, we've seen growth in our former customer base.
Speaker Change: Currently, we're the highest number of former customers in July that we've had going back at least 10 years.
Speaker Change: All at lower average balances, higher yields, and great credit quality, leading us to expect continued low delinquency.
Ravin Chad Prashad: To date, in July, new customers have improved over the prior two years, as well. But our focus remains on a low total cost of acquisition for performing customers. And we'll continue to invest wisely for high credit quality growth as we work towards moderate single-digit ledger growth this year. In addition to portfolio performance, our prudent management has also resulted in a 9.9% reduction in G&A expenses this quarter compared to the first quarter last year. This is especially important during a prolonged period of increasing expenses nationwide.
Chad Prasad: The date in July, new customers has improved to the prior two years as well. But our focus remains on a low total cost of acquisition of performing customers and will continue to invest wisely for high credit quality growth as we work towards moderate, single-digit leather growth this year. In addition to portfolio performance, our product management has also resulted in a 9.9 percent reduction in DNA expenses this quarter compared to the first quarter last year. This is especially important during a prolonged period of increasing expenses nationwide. With economic stability increasing and improved portfolio performance, management continues to improve the long-term incentive plan, with besting tiers of $16.35 and $20.45 earnings per share.
Speaker Change: The date in July , new customers has improved to the prior two years as well, but our focus remains on a low total cost of acquisition of performing customers and we'll continue to invest wisely for high credit quality growth as we work towards moderate single digit ledger growth this year.
Speaker Change: In addition to portfolio performance, our prudent management has also resulted in 9.9% reduction in G&A expenses this quarter compared to the first quarter last year.
Speaker Change: This is especially important during a prolonged period of increasing expenses nationwide.
Ravin Chad Prashad: With economic stability increasing and improved portfolio performance, management continues to accrue to the long-term incentive plan with vesting tiers of $16.35 and $20.45 earnings per share. Even with the much-improved credit quality, yield, and operating conditions I've discussed, we'll continue to build confidence throughout the second quarter on achieving these, especially the $20.45 for the full fiscal year. Finally, we have an absolutely amazing team here at World, and I'm very grateful for their commitment to their customers as well as to each other.
Speaker Change: With economic stability increasing and improved portfolio performance, management continues to accrue for the long-term incentive plan with vesting tiers of $16.35 and $20.45 earnings per share.
Chad Prasad: Even with the much improved product quality yield and operating conditions I discuss, we'll continue to build confidence throughout the second quarter on achieving these targets, especially the $20.45 for the full fiscal year target. Finally, we have an absolutely amazing team here at World. I'm very grateful for their commitment to their customers as well as to each other. They are helping our customers every day to establish credit, rebuild credit, and meet their media financial needs.
Speaker Change: Even with the much-improved credit quality, yield, and operating conditions I've discussed, we'll continue to build confidence throughout the second quarter on achieving these targets, especially the $20.45 for the full fiscal year target.
Speaker Change: Finally, we have an absolutely amazing team here at World, and I'm very grateful for their commitment to their customers as well as to each other. They are helping our customers every day to establish credit, rebuild credit, and meet their immediate financial needs.
Ravin Chad Prashad: They are helping our customers every day to establish credit, rebuild credit, and meet their immediate financial needs. At this time, Johnny Calmes, our Chief Financial and Strategy Officer, and I would like to open up to any questions. We will now begin the question and answer session.
Johnny County: At this time, Johnny County's are chief financial strategy officer, and I would like to open any questions that you may have.
John J. Rowan: At this time, Johnny Calmes, our Chief Financial and Strategy Officer, and I would like to open to any questions that you may have.
Operator: We will now begin the question or answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys.
Operator: To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question is from John Rowan with Janney. Please go ahead. Good morning, guys.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you may press star then 1 on your telephone keypad.
Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.
Operator: To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.
Speaker Change: To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.
John Rowan: The first question is from John Rowan with Janney. Please go ahead.
Speaker Change: The first question is from John Rowan with Jannie. Please go ahead.
John Rowan: Good morning, guys. Morning.
John J. Rowan: Chad, did I hear you correctly say that you're going to grow Ledger by mid-single digits or low-single digits for fiscal 2025? Yeah, that's right. Okay, so, I mean, just, so you're talking about period end fiscal 2024, so the $1.3 billion gross or $847 million net, just mid-semi-low-digit growth off of that number by the end of the year. Yeah. Okay. Um... Is there a reason why it looks like you guys increased the allowance ratio a little bit sequentially? Is there, you know, are you changing any expected loss rates?
Chad Prasad: Chad, did I hear you correctly saying that you're going to grow ledger by mid-singled digits, or low-singled digits for a fiscal 2025? Yes, that's right.
John J. Rowan: Good morning, guys.
John J. Rowan: Morning.
John J. Rowan: Chad, did I hear you correctly saying that you're going to grow Ledger by mid-single digits or low-single digits for fiscal 2025?
Ravin Chad Prashad: Yeah, that's right.
Chad Prasad: So, you're talking about, I mean, you're talking about off of period N fiscal 2024, so the 1.3 billion grows, or 847 million, mid-singled digits growth off of that number by the end of the year. Yes, that's right.
Speaker Change: okay so I mean just so you see you're talking about I mean you're you're talking about off of period and fiscal 2024 so the 1.3 billion gross or
Speaker Change: $847 million net, just mid-single-digit growth off of that number by the end of the year.
Speaker Change: Yeah, that's right.
Chad Prasad: Is there a reason why it looks like you guys increased the allowance ratio a little bit sequentially? Is there, are you changing any expected loss rates?
Speaker Change: Okay.
Speaker Change: Is there a reason why it looks like you guys increased the allowance ratio a little bit sequentially? Are you changing any expected loss rates?
John L. Calmes: I think a lot of it was just the expected loss rates increased faster this year than they did relative to last year. But they're still lower at June 30 this year than they were at June 30, Fiscal 24. So we haven't increased them, but it's really more to do with what happened last year. The expected loss rates were decreasing faster in Q1 of 24 than they were this year, if that makes sense. Okay.
Chad Prasad: I think a lot of it was just the expected loss rates increased faster this year than it had been. So, we have increased them. It's really more as soon as it was going to happen last year. The expected loss rates were decreasing faster in Q1 of 24 than they were this year.
Speaker Change: I think a lot of it was just the expected loss rates.
Speaker Change: increased.
Speaker Change: faster this year than they did relative to last year.
Speaker Change: But they're still, they're lower at June 30 this year than they were at June 30, Fiscal 24.
Speaker Change: So we haven't increased them, but it's really more has to do with what happened last year. The expected loss rates were decreasing faster in Q1 of 24 than they were this year, if that makes sense.
Chad Prasad: That makes sense. And just to be clear, you're still accruing for 20 dollars and 45 cents of earnings for this year in the incentive company.
John L. Calmes: And just to be clear, you're still accruing for $20.45 of earnings for this year in the incentive comp because there was something in the press release about lower incentive compensation.
Speaker Change: Okay. And just to be clear, you're still accruing for $20.45 of earnings.
Chad Prasad: There was something in the pressure lease about lower incentive compensation. Right, a lot of it has to do with, there's two things going on there.
Speaker Change: for this year in the incentive comp. There was something in the press release about lower incentive compensation.
John L. Calmes: Right. A lot of it has to do with, there's two things going on there. We had some officers, field officers, leave during the quarter, which led to some being retired during the quarter, which led to some releases. And there's also with the great investing nature of the long-term plan; there's just less expense to accrue. So relative to last year, we're no longer accruing for the third tranche, so that's not in there. And yeah, there are basically six time-based tranches in that plan. But we're only still accruing for one of those tranches because the others have been fully expensed. So that's... that's driving that share based comp number coming down.
Chad Prasad: We had officers; the officers leave during the quarter, which led to some retired or in the quarter, which led to some releases. And there's also the great investing nature of the long-term plan. There's just less expense to accrue. So, you know, we're all just the last year. We're no longer accruing for the third crunch. So that's not in there. And yeah, there's basically six time base torches in that plan. We're only still accruing for one of those torches because the others have been fully fixed. So that's best for struggling. That, that share base common that we're coming down.
Speaker Change: A lot of it has to do with, there's two things going on there. We had some...
Speaker Change: officers, field officers leave during the quarter.
Speaker Change: which led to some, or retired during the quarter, which led to some releases. And there's also, with the great investing nature of the long-term plan, there's just less expense to accrue. So, you know, relative to last year.
Speaker Change: We're no longer accruing for the third tranche, so that's not in there.
Speaker Change: There's basically six time-based tranches in that plan. We're only still accruing for one of those tranches because the others have been fully expensed.
John L. Calmes: And John, yes, we are still accruing towards $20.45, but... The main factors into achieving that for this fiscal year are really some things around growth, yields, and delinquency. So as we continue throughout this current quarter, the second quarter, we'll build some confidence around how likely we continue to think that is.
Speaker Change: That's what's driving that share based comp number coming down. And John , yes, we are still accruing towards $20.45, but
Chad Prasad: And yeah, so we are still accruing towards 20 dollars and 45 cents.
Chad Prasad: But, you know, the main factors into achieving that for this fiscal year are really some things around growth yields in delinquency. So as we continue throughout this current quarter, the second quarter, you know, we'll build some confidence around, you know, how likely we continue to think that is.
John J. Rowan: The main factors into achieving that for this fiscal year are really some things around growth, yields, and delinquency. So as we continue throughout this current quarter, the second quarter, we'll build some confidence around how likely we continue to think that is.
John L. Calmes: Yeah, so I mean, I was going to get into that next. We've spoken in the past about, you know, the 2530 tranche, which obviously stopped accruing for. I mean, you know, we had kind of penciled in a, the only way to get to that number is a high single-digit type loss rate. You know, I think at the 20-something number 2045 number, you're talking about a low double-digit type loss rate. If I remember correctly from prior conference calls, your charge-off rate came down a little bit year over year, but it's still 16.4%.
John Rowan: Yeah, so I mean, I was going to get into that next. I mean, we've spoken in the past about, you know, I remember, you know, the 25, 30 Toronto, which obviously stopped the crewing for, I mean, you know, we had kind of pettled in. The only way to get to that number is a high single digit type loss rate. You know, I think at the 20, something number is 20, 45 number, you're talking about the low double-digit type loss rate, if I remember correctly, from prior conference calls. You know, your charge rate came down a little bit year over year, but it's still, you know, 16.4%; like we're still really far away from the low double digit.
John J. Rowan: Yeah, so, I mean, I was going to get into that next. I mean, we've spoken in the past about, you know,
John J. Rowan: I remember, you know, the 25-30 tranche, which obviously stopped the crew in four. I mean, you know, we had...
Speaker Change: Kind of penciled in the only way to get to that number is a high single-digit type loss rate
Speaker Change: I think at the 20-something number, 2045 number, you're talking about a low double-digit type loss rate, if I remember correctly, from prior conference calls. You know, your charge-off rate came down a little bit year over year, but it's still 16.4%. Like, we're...
John L. Calmes: Like we're We're still really far away from a low double-digit loss content. How do you, how are you getting there? I mean, and to be frank, I mean, you have to actually overcompensate given, you know, for the remaining three quarters of the year, given you were at 16.4% for the quarter. How are you getting to that type of number?
John Rowan: Laws content. How are you getting there? I mean, then to be frank, I mean, you have to actually overcompose a given, you know, for the remaining three quarters of the year, giving you a 16.4% for the quarter. How are you getting to that type of number?
Speaker Change: We're still really far away from a low double-digit.
Speaker Change: lost content. How do you, how are you getting there? I mean, and to be frank, I mean, you have to actually overcompensate given, you know, for the remaining three quarters of the year, given you're at 16.4% for the quarter. How are you getting to that type of number?
John L. Calmes: Yeah, so there are a few things there. Over the last 12 months, yields have continued to increase, and that takes some of the pressure off the net charge-off rate, right? But to be fair, yeah, we still need to see improvement in that net charge-off rate, and we see a lot of things happening operationally that can lead to that. But yeah, so it's a combination of yields continuing to increase, continued improvement in that net charge-off rate, and some modest growth. And as Chad said, you know, we'll build some confidence in whether that's achievable by September. We'll have a pretty clear picture by September.
Chad Prasad: Yeah, so there's a few things there. So, over the last 12 months, that the yields have continued to increase. And that's, that takes some of the pressure off of the net charge-off rate, right? So, but to be fair, yes, we still need to see improvement in that net charge-off rate. And we see a lot of the things happening operationally that can lead to that. So, yeah, so it's a combination of yields, continued to increase, continued improvement in that net charge off rate, and some modest growth.
Speaker Change: Yeah, so there's a few things there.
Speaker Change: Over the last 12 months, the yields have continued to increase, and that takes some of the pressure off of
Speaker Change: Thank you.
Speaker Change: But yeah, so it's a combination of yields continue to increase, continued improvement in that net charge off rate, and some modest growth.
Chad Prasad: And as Chad said, you know, we'll, you know, we'll build some confidence, and, and, and, and whether that's achievable by September, like one pretty clear picture by September.
Ravin Chad Prashad: And as Chad said, we'll build some confidence in whether that's achievable by September . We'll have a pretty clear picture by September .
John L. Calmes: Okay, I mean, wouldn't modest growth actually hurt your chances to get to that? I mean, modest growth would help next year, but given how much you have to reserve for your CECL provision, I would think that modest growth actually is a hindrance to earnings growth.
John Rowan: Okay, I mean, wouldn't modest growth actually hurt your chances to get to that. I mean, modest growth would help next year, but given, given how much you have to reserve for your Cecil provision, and I would think that the modest growth actually is a hindrance to turning growth. Fair enough; it depends when that growth happens, right? So, yeah, you're right. So, you know, modest growth that all happens in Q4 doesn't help so a lot, but, you know, if we can get it in the next quarter. So, there's enough revenue that comes with it throughout the fiscal year that it benefits us.
Speaker Change: Okay, I mean wouldn't modest growth actually hurt your chances to get to that? I mean modest growth would help next year, but given
Speaker Change: Given how much you have to reserve for your CECL provision, I would think that the modest growth actually is...
John L. Calmes: Fair enough, it depends when that growth happens, right? So, yeah, you're right. So, you know, modest growth that all happens in Q4 doesn't help a whole lot. But, you know, if we can get it in the next quarter or so, there's enough revenue that comes with it throughout the fiscal year that it benefits us. And John, that's all I'll say.
Speaker Change: [inaudible]
Speaker Change: [inaudible]
John Rowan: Yeah, sorry, go ahead. Yep.
John L. Calmes: Yes, sir, go ahead. Yes, yes. That's also why we have focused more on former customers. One, just the lower cost of acquisition, but two, also their performance leads us to charge less for them. And then, you know, overall profitability is higher for that group of customers. And then for new customers, we're still focused on new customers, but we are looking at a lower total cost of acquisition. And when I say that, I'm talking about not just the marketing spend but operational spend, as well as provision loss on that group. Thank you.
Chad Prasad: That's also why we have focused more on former customers. One is the lower cost of acquisition, but two also there are performance leads us to accrue, that's for them. And then, you know, overall profitability is higher for those, for that group of customers.
Speaker Change: Yes, sir. Go ahead.
Speaker Change: That's also why we have focused more on former customers, one, just the lower cost of acquisition, but two, also their performance leads us to accrue less for them, and then overall profitability is higher for that group of customers.
Chad Prasad: And then for new customers, we're still focused on new customers, but we are looking at lower total cost of acquisition. And when I say that, I'm talking about not just the marketing spend, but operational spend as well as provision loss on that group. So, with all that in mind, yes, we're very aware that any growth we have hurts in the short term. So, you know, one, we recognize we still have to do it as a company because that feeds the future's success for the portfolio. But, too, make sure we do it incredibly prudently from the cost perspective and credit quality perspective.
Speaker Change: [inaudible]
John L. Calmes: With all that in mind, yes, we're very aware that any growth we have hurts in the short term. And so, you know, one, we recognize we still have to do it as a company because that feeds the future success of the portfolio, but to make sure we do it incredibly prudently from a cost perspective and credit quality.
Speaker Change: Wait.
Speaker Change: With all that in mind, yes, we're very aware that any growth we have hurts in the short term. So, one, we recognize we still have to do it as a company, because that feeds the future success for the portfolio. But two, making sure we do it incredibly prudently from a cost perspective and credit quality perspective.
John J. Rowan: Okay, and then last question for you: just what's the right tax rate to use, a little bit lower than my model for the quarter? I should make sure I have it going forward.
John Rowan: Okay, and then last question for you.
John Rowan: Just what's the right tax rate to use a little bit lower than my model for the quarter? I should make sure I have it going forward. Yeah, it'll, it'll, it'll, it'll kind of change quarter to quarter, but, you know, it's still that 20 to 20 percent for the year. You see, 20 to 21 per cent. Yeah, for the, for the year.
Speaker Change: Okay, and then last question for you, just what's the right tax rate to use a little bit lower than my model for the quarter? I should make sure I have it going forward.
John L. Calmes: Yeah, it kind of changes quarter to quarter, but it's still that 20-21% for the year.
Speaker Change: Yeah it'll it'll it kind of changes quarter to quarter but you know it's still that 20 to 21 percent for the for the year.
John J. Rowan: You see 20 to 21 percent. Yeah, for the year. Alright. Thank you very much.
Speaker Change: You see 20 to 21 percent.
Operator: All right, thank you very much. Again, if you have a question, please press star, then one.
Speaker Change: Yeah, for the year.
Operator: Again, if you have a question, please press star then 1. The next question is from Guy Riegel with Ingalls & Snyder. Please go ahead.
Speaker Change: All right, thank you very much.
Speaker Change: Yep.
Speaker Change: Again, if you have a question, please press star then 1.
Guy Regal: The next question is from Guy Regal with Engels and Snyder. Please go ahead.
Speaker Change: The next question is from Guy Riegel with Ingalls & Snyder. Please go ahead.
Guy Regal: Hey, guys. Good morning. I was just curious.
Guy Riegel: Hey guys, good morning. I was just curious, can you speak to the regulatory environment in the states you operate in as well as on the federal level?
Guy Riegel: Hey guys, good morning. I was just curious, can you speak to...
Guy Regal: Can you speak to, hello? Can you speak to the regulatory environment in the States? You operate in as, as well as on the federal level?
Guy Riegel: Hello, can you speak to the regulatory environment in the states you operate in as well as on the federal level?
Chad Prasad: Yeah, so at the state level, you know, there's two states over the last couple of years that we have moved to be sub 36%: Illinois and New Mexico. You know, for the other states that we operate in, we haven't seen any significant changes from a regulatory or legislative perspective. Of course, you know, every state we operate in, we are regulated by those states and supervised by those states and continue to be so.
John L. Calmes: Yeah, so at the state level. You know, there are two states that we have moved to be sub-35 percent, but Illinois and New Mexico, you know, for the other states that we operate in, significant changes from a regulatory or legislative perspective. Of course, every state we operate in is regulated by those states and supervised by those states and will continue to be so. At the federal level, as you know, back in February, the CVB published an order establishing their authority to supervise the world.
Speaker Change: Yeah, so at the state level.
Speaker Change: There's two states over the last couple of years that we have moved to be sub-36 percent, both Illinois and New Mexico. For the other states that we operate in,
Speaker Change: [inaudible]
Speaker Change: regulated by those states and supervised by those states and continue to be so. At the federal level, as you know, back in February , the CBB published an order establishing their authority to supervise world. We continue to cooperate with them and their supervision process.
Chad Prasad: At the federal level, as you know, back in February, the CVB published an order establishing their authority. Supervised world, we continue to cooperate with them and their supervised supervision process. You know, this is, this is both our first supervision by them as well as they are one of their first supervision of an installment lender, so we expect that, you know, they're going to focus on the areas that are outlined in that order and that this will be a learning process and it will likely be very difficult for us to judge, you know, any of their timelines.
John L. Calmes: We continue to cooperate with them and their supervisory process. You know, this is both our first supervision by them as well as one of their first supervisions of an installment lender, so we expect that, you know, they're going to focus on the areas outlined in that order and that this will be a learning process, and it will likely be very difficult for us to judge, you know, any of their timelines. You know, however, their order does give us the ability to petition to end their supervisory period after two years, but this time, you know, aside from the supervision order itself, Okay.
Speaker Change: This is both our first supervision by them as well as one of their first supervisions of an installment lender.
Speaker Change: So we expect that, you know, they're going to focus on the areas outlined in that order and that this will be a learning process and it will likely be very difficult for us to judge, you know, any of their timelines.
Chad Prasad: You know, however, their order does give us the ability to petition to sit in their supervisor period after two years. But at this time, you know, aside from the supervision order itself in the CVB, we don't have any other updates to report on.
Speaker Change: However, their order does give us the ability to petition to end their supervisory period after two years. But at this time, aside from the supervision order itself and the CBP, we don't have any other updates to report on.
Guy Riegel: Okay, so today it hasn't, and they haven't impacted your business.
Chad Prasad: Okay, so today, it has; they haven't impacted your business. No, no, not today.
Speaker Change: Okay, so to date it hasn't, they haven't impacted your business.
John L. Calmes: No, no, not today.
Guy Riegel: Okay, and then I thought maybe a while ago you mentioned the possibility of securitizing some of your loans. What's the status of that?
Guy Regal: Okay.
Guy Regal: And then I thought maybe a while ago, maybe mentioned the possibility of securitizing some of your loans.
Speaker Change: Uh, no, no, not today.
Speaker Change: Okay, and then I thought maybe a while ago you maybe mentioned
Speaker Change: The possibility of securitizing some of your loans, what's the status of that?
Chad Prasad: What's the status of that? Yeah, so we're actually in process, you know, as we speak of, you know, creating a warehouse facility, and that's that's one of the first steps in the securitization process, right?
John L. Calmes: Yeah, so we're actually in the process, you know, as we speak of creating a warehouse facility, and that's sort of the first step in the securitization process, right? So, you know, we hope to have that warehouse facility rolled out in the probably fiscal third quarter.
Speaker Change: Yeah, so we're actually in process, you know, as we speak of, you know, creating a warehouse facility and that's that's sort of the first step in the securitization process, right? So, you know, we hope to have
Chad Prasad: So, you know, we hope to have, you know, that that warehouse facility rolled out in the, probably, fiscal's third quarter. Okay, great.
Speaker Change: that warehouse facility rolled out in the probably fiscal third quarter.
Guy Riegel: Okay, great. Okay, thank you so much.
Guy Regal: Okay, thank you so much. Thanks, Scott.
Ravin Chad Prashad: Thanks, Scott. This concludes our question and answer session. I would like to turn the conference back over to Chad Prashad for any closing remarks.
Speaker Change: Okay, great. Okay, thank you so much.
Operator: This concludes our question and answer session.
Guy Riegel: Thanks, Guy.
Chad Prasad: I would like to turn the conference back over to Chad Prachard for any closing remarks. Thank you for taking the time to join us today.
Guy Riegel: This concludes our question and answer session. I would like to turn the conference back over to Chad Prashad for any closing remarks.
Ravin Chad Prashad: Thank you for taking the time to join us today, and this concludes the first quarter earnings call for World Acceptance.
Chad Prasad: And this concludes the first quarter earnings call for World Acceptance.
Ravin Chad Prashad: Thank you for taking the time to join us today and this concludes the first quarter earnings call for World Acceptance.
Operator: The conference is now concluded. Thank you for attending today's presentation.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: You may now disconnect.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: ?? ??